Indices gain 1.6% scaling 32 month closing highs

In a buoyant start for the week, the key benchmark indices jumped about 1.6% to scale fresh 32-month highs, with indices extending last week's close to 4.2% rally. Indian bourses outperformed the gains in global stocks. The foreign institutional investors' buying spree and higher Q2 advance tax payments from frontline companies underpinned sentiment. The BSE 30-share Sensex was up 311.35 points or 1.59%, off close to 20 points from the day's high and up close to 160 points from the day's low. The BSE Sensex and Nifty were in the close vicinity of psychological 20000 and 6000 mark respectively.



The market breadth was strong. All the 13 sectoral indices on the BSE logged gains. FMCG stocks were in demand with cigarette major ITC striking lifetime high. Metal and mining stocks gained mirroring rise in global metal prices. HDFC Bank and TCS too scaled lifetime highs. Banking shares rose on fresh buying. Software pivotals saw mixed trend. Index heavyweights Reliance Industries, Bharti Airtel and Infosys logged smart gains.

European shares rose on Monday, after four-days of losses as investors remained optimistic ahead of Tuesday's Federal Reserve meeting. The key benchmark indices in France, Germany and UK rose by between 0.57% to 1.2%.

Asian stocks were mixed in light trading Monday, 20 September 2010. The key benchmark indices in South Korea, Hong Kong, Singapore and Taiwan were up by between 0.03% to 0.35%. But, key indices in China and Indonesia were down 0.38% and 0.40% respectively. Japanese markets are closed today for a holiday.

Trading in US index futures indicate that the Dow could gain 46 points at the opening bell on Monday, 20 September 2010.

US markets logged small gains on Friday, 17 September 2010, led by technology stocks. The Dow Jones Industrial Average rose 13.02 points, or 0.12%, to 10607.85. The Standard & Poor's 500-share index gained 0.93, or 0.08%, to 1125.59 and the Nasdaq Composite index gained 12.36, or 0.54%, to 2315.61.

The key event to watch out for is US Federal Reserve's monetary policy meeting on Tuesday, 21 September 2010. The Fed policymakers will access whether the US economy needs reinforced monetary crutches. The US central bank has already cut benchmark interest rates to near zero and pumped more than $1.7 trillion into the economy through purchases of Treasury and mortgage-related debt.

Back home, foreign institutional investors (FIIs) are in a buying spree in India. As per provisional figures, foreign institutional investors (FIIs) bought shares worth a net Rs 1518.76 crore on Friday, 17 September 2010. Domestic institutional investors dumped shares worth Rs 747.24 crore on that day.

FII inflow in September 2010 totaled Rs 12442.80 crore (till 16 September 2010). FIIs had bought equities worth Rs 11687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 71824.50 crore (till 16 September 2010).

Buoyed by earnings growth in banks, financial services and manufacturing firms, Corporate India has paid 15% higher advance tax in the June-September 2010 quarter over the year-ago period. Companies pay advance taxes in four installments throughout the year based on the business they are doing and hence, the advance tax payments made are seen as a barometer of the companies' performance.

Global fund tracker EPFR Global on Friday, 17 September 2010, said developing-nation equity funds received inflow of about $3.3 billion in the week to 15 September 2010 as Chinese industrial output gains bolstered sentiment. Inflow into Asia ex-Japan equity funds hit a seven-week high. Flows into India equity funds hit an eight-week high.

Meanwhile, the Union Cabinet on Thursday, 16 September 2010, approved amendments to the Forward Contracts (Regulation) Act 1952, paving the way for the introduction of the Forward Contracts (Regulation) Amendment Bill, 2010 in Parliament. If passed by the both the Houses, it will pave the way for local and foreign institutional investors in commodity futures and bring in new products.

At a mid-term policy review on Thursday, 16 September 2010, the Reserve Bank of India (RBI) signaled that it may be nearing a pause in its current tightening cycle. The central bank said its rate and liquidity actions since October 2009 have been driven by two considerations -- normalisation of the monetary policy stance as the crisis abated and inflation management. The Reserve Bank of India believes that the tightening that has been carried out over this period has taken the monetary situation close to normal, it said. Consequently, the role of normalisation as a motivation for further actions is likely to be less important, the RBI said.

The RBI on Thursday raised its repo rate, or benchmark lending rate, by a quarter point to 6%, at a mid-term monetary policy review. The central bank also hiked the reverse repo rate, or the rate at which it borrows funds, by half a point to 5%. Both these changes will take place with immediate effect.

India's exports grew 22.5% to $16.64 billion in August 2010 over August 2009, while imports rose 32.3% to $29.7 billion data last week showed. As a result, trade deficit, or the difference between exports and imports, widened to $13.5 billion. During the April-August 2010 period, exports posted a growth rate of 28.6% to $85.27 billion over the previous year, while total imports grew by 33.1% to $141.89 billion, according to initial estimates released by the Ministry of Commerce and Industry.

The BSE 30-share Sensex was up 311.35 points or 1.59% to 19,906.10 its highest closing level since 15 January 2008. The Sensex gained 332.55 points at the day's high of 19,927.30, in late trade. The index lost 149.33 points at the day's low of 19,445.42 in early trade.

The S&P CNX Nifty was up 95.50 points or 1.62% to 5,980.45, its highest closing level since 15 January 2008. Nifty struck a high of 5,989.50 in late trade.

The market breadth, indicating the health of the market was strong. On BSE, 1789 shares advanced while 1219 shares declined. A total of 96 shares remained unchanged.

The total turnover on BSE amounted to Rs 5187 crore higher compared with Rs 4987.76 crore on Friday, 17 September 2010.

Among the 30-share Sensex pack, 25 advanced while only 5 of them declined.

The BSE Mid-Cap index rose 0.66% and the BSE Small-Cap index gained 0.74%. Both these indices underperformed the Sensex.

The BSE FMCG index (up 3.5%) and the BSE Realty index (up 1.73%) outperformed the Sensex.

The BSE Power index (up 0.32%), BSE PSU index (up 0.55%), BSE Healthcare index (up 0.59%), BSE IT index (up 0.59%), BSE Consumer Durables index (up 0.69%), Banking index Bankex (up 1.1%), BSE Oil & Gas index (up 1.13%), BSE Capital goods index (up 1.22%), BSE Metal index (up 1.28%) and BSE Auto index (up 1.31%) underperformed the Sensex.

India's top cigarette maker by sales ITC spurted 4.93% to Rs 176.60 on reports it might soon start work on its proposed integrated foods factory in Bengal as the West Bengal Industrial Development Corporation is to hand over about 18 acres of land to the company at Ulberia in Howrah on 25 September 2010. The stock struck a record high of Rs 178.30 in intra-day trade today.

Among other FMCG stocks, United Spirits, Marico, Hindustan Unilever and Nestle India rose by between 0.27% to 3.79%.

Index heavyweight Reliance Industries (RIL) was up 1.26% to Rs 1039.70. Reports last week indicated RIL is in advanced talks with US-based Chesapeake Energy to buy a stake in Eagle Ford shale gas project in the US.

Metal and mining stocks gained as the dollar's decline boosted the appeal of metals as an alternative investment. LMEX, a gauge of six metals traded on the London Metal Exchange, rose 0.29% on Friday, 17 September 2010. National Aluminum Company, Jindal Steel & Power, Tata Steel, Steel Authority of India, Hindalco Industries and Sesa Goa rose by between 0.05% to 3.23%.

But, India's largest non-ferrous metals producer by sales Sterlite Industries lost 1.1% to Rs 171.35 on profit booking. It was the top loser from the Sensex pack.

India's top truck maker by sales Tata Motors advanced 1.98% on reports the company is mulling a significant hike in the price of its passenger cars Indica and Indigo with effect from 1 October 2010.

Banking shares rose on fresh buying. India's largest bank by net profit and branch network State Bank of India (SBI) rose 0.44%. As per media reports, SBI has sought the finance ministry's approval for raising Rs 20,000 crore through a follow-on public offering (FPO) or a rights issue. The proposed capital raising would facilitate the bank to improve its capital adequacy ratio from 13.5% as of Q1 June 2010, thereby enabling the bank to grow at a healthy pace over the next couple of years.

India's largest private sector bank by net profit ICICI Bank rose 1.15%, extending two-day 1.52% gain, on follow-up buying.

India's second largest private sector bank by net profit HDFC Bank rose 1.92% to Rs 2445.70 after striking a record high of Rs 2471.40 in intra-day trade today, 20 September 2010. Recent reports indicated the bank's advance tax payment jumped 41% to Rs 600 crore in Q2 September 2010 from Rs 425 crore in Q2 September 2009.

Telecom pivotals extended recent gains. India's second largest listed cellular services provider by sales Reliance Communications jumped 5.14%, extending Friday's over 5% surge.

India's largest listed cellular services provider by sales Bharti Airtel advanced 2.35%, extending Friday's 2.93% gains, on reports it in talks with other mobile operators to form a strategic alliance to offer third generation services on a pan-India level.

Software pivotals saw mixed trend. India's second largest software services exporter by sales Infosys rose 1.07% on reports it has won approval for a special economic zone in Bangalore.

India's largest IT exporter by sales TCS fell 0.21% to Rs 910.55 after striking a record high of Rs 921.50 in intra-day trade today, 20 September 2010. The company announced before market hours on 15 September 2010, that it has entered into a significant multi-year agreement with SUPERVALU Inc, one of the largest grocery retailers in North America, for full services engagement.

India's third largest software services exporter Wipro rose 0.11% in volatile trade. Reportedly, it has received the nod to set up two special economic zones -- one each at the Kodathi village in Bangalore and Mandya district in Mysore.

Capital goods stocks rose on expectations of robust order flow for capital goods on upbeat domestic economy. SKF India, Thermax, ABB, Praj Industries and Larsen & Toubro rose by between 0.38% to 2.62%.

Some consumer durables stocks rose on expectations of good demand for durable products in a festive season. Blue Star, Gitanjali Gems and Videocon Industries rose by between 8.12% and 0.07%.

Cals Refineries clocked the highest volume of 6.28 crore shares on BSE. Ispat Industries (2.88 crore shares), Karuturi Global Solutions (2.31 crore shares), Shree Ashtavinayak Cine Vision (1.24 crore shares) and Delta Corp (95.52 lakh shares) were the other volume toppers in that order.

Tata Steel clocked highest turnover of Rs 114.11 crore on BSE. Reliance Industries (Rs 113.46 crroe), State Bank of India (Rs 102.20 crore), HDFC (Rs 88.13 crore) and Orchid Chemicals (Rs 74.46 crore) were the other turnover toppers in that order.